A couple of weeks ago in our newsletter we had story about EQT making a call that the NatGas price in the Appalachian could have bottomed. I think I agree.
The rig counts in PA, OH and WV have been somewhat flat the five weeks. The rig count in PA has hovered around 16 rigs. In OH and WV, the rig count has been bouncing back and forth between 10 and 12 rigs.
One of the pieces of information that supports my thinking is the fact that I’m starting to hear rumors that some of the exploration and production companies are thinking about bringing in another rig or two into the Appalachian Basin. For instance, I heard that Antero was bringing two rigs into WV. Anadarko is thinking about bringing in a rig into PA. Eclipse Resources may start drilling again.
When I look at the permits being issued in PA and OH last week which were up significantly, I say to myself, “Yes, the bottom may be in.”
During the last five weeks, the price of NatGas has been fluctuating between $2.05 and $2.15. While everyone would like the price to be higher, a number of operators can make money at this price level.
In the Appalachian Basin, we’ve had a warm winter and average spring. NatGas storage, which is good barometer for pricing, is above normal. A very hot summer can change all of that and drive the price up.